Home loans soar as house prices hit record

Home loans continue to grow at a record pace, even as housing prices hit new highs in the first weeks of 2021.

The Australian Bureau of Statistics said the value of new owner-occupier home loan commitments surged 8.7 per cent in December to $19.9 billion, 38.9 per cent higher than a year earlier.

“Federal and state government measures, such as HomeBuilder, and historically low interest rates are supporting ongoing growth in housing loan commitments,” ABS head of finance and wealth Amanda Seneviratne said.

The number of owner-occupier first home buyer loans rose 9.3 per cent, a 56.6 per cent rise since December 2019.

This is the highest level since June 2009, when similar rapid growth was spurred by the temporary tripling of the first home owner grant to help combat the global financial crisis.

Separate figures show house prices across the nation rose by a further 0.9 per cent in January to stand one per cent higher than pre-COVID levels, and 0.7 per cent above the previous September 2017 peak.

CoreLogic research shows every capital city recorded a rise over the month, ranging from a 2.3 per cent surge across Darwin to a relatively mild 0.4 per cent increase in Sydney and Melbourne.

Regional property values grew at twice the pace of capital city housing markets, with the divergence more notable in Sydney and Melbourne which are suffering from the lack of overseas migration.

“Better housing affordability, an opportunity for a lifestyle upgrade and lower density housing options are other factors that might be contributing to this trend, along with the new found popularity of remote working arrangements,” CoreLogic research director Tim Lawless says.

Meanwhile, job advertising continued to grow in January, suggesting further solid employment gains in the first half of 2021.

The ANZ jobs ads series rose 2.3 per cent in January, the eighth consecutive monthly increase, to be 5.3 per cent higher than a year earlier.

At the same time, manufacturers have used the usually quiet year-end holiday period to make up for the business lost over 2020 during the recession.

Australian Industry Group chief executive Innes Willox is encouraged by the turnaround in conditions since September, but says the sector has yet to return to pre-COVID conditions.

The Ai Group performance of manufacturing index increased by 3.2 points over the past two months to 55.3 points, indicating the sector is expanding.

The Reserve Bank is not expected to change its view on the interest rate outlook when its board meets for the first time this year on Tuesday, despite a range of positive economic results in recent weeks.

The central has repeatedly said it will not raise the cash rate until inflation is sustainably within its two to three per cent target. 

The annual rate of the consumer price index ended 2020 at just 0.9 per cent.

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